Wrapped Bitcoin

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Sky, formerly MakerDAO, is evaluating the removal of Wrapped Bitcoin from SparkLend over concerns about its ties to Justin Sun. 
Sky is considering removing Wrapped Bitcoin (<a href="http://crypto.news/price/wrapped-bitcoin/" target="_blank">WBTC</a>) as collateral from its decentralized finance platform SparkLend, citing concerns about the token’s affiliations with TRON founder <a href="https://crypto.news/tag/justin-sun/" target="_blank">Justin Sun</a>. 
On Sept. 12, the team behind Sky <a href="https://forum.makerdao.com/t/attention-wbtc-vault-and-wbtc-sparklend-users/25080" target="_blank">announced</a> a proposal to offboard in “several steps with” WBTC-A, WBTC-B, WBTC-C, and WBTC from SparkLend, a decentralized non-custodial liquidity protocol, with the process expected to start on Sept. 26. 
The decision comes in response to recent developments involving <a href="https://crypto.news/tag/bitgo/" target="_blank">BitGo</a> and its upcoming partnership with BitGlobal, which is understood see control of WBTC shift to a joint venture linked to Sun. 
 You might also like: <a rel="" href="https://crypto.news/layerzero-becomes-bitgos-official-interoperability-protocol-for-wbtc/"> LayerZero becomes BitGo’s official interoperability protocol for WBTC </a> 
Sky’s forum post advised users to close their WBTC Legacy Vaults and positions on SparkLend to prevent potential liquidation, citing concerns about increased counterparty risks linked to Sun’s influence, similar to <a href="https://crypto.news/trueusds-crashes-79-following-binance-delisting/" target="_blank">problems</a> seen with other projects associated with him, like the TrueUSD stablecoin. 
The controversy surrounding WBTC intensified after a proposal from BA Labs highlighted potential risks associated with Sun’s influence. In a <a href="https://forum.makerdao.com/t/wbtc-changes-and-risk-mitigation-10-august-2024/24844/11" target="_blank">forum post</a> on Aug. 10, BA Labs suggested that recent custody changes and historical issues with Sun-affiliated products warranted caution. 
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow"> 
 “On the whole, we find that Sun’s involvement as a controlling interest in the new WBTC joint venture presents an unacceptable level of risk.” 
 BA Labs 
</blockquote> 
BitGo CEO Mike Belshe <a href="http://forum.makerdao.com/t/wbtc-changes-and-risk-mitigation-10-august-2024/24844/3" target="_blank">defended</a> the security protocols in place, pointing out that the proposal to offload WBTC “seems to be more a reaction to the Justin Sun name than to facts.” 
Nonetheless, he admitted that the BitGo team was also “concerned that some would react this way to his [Justin Sun’s] name, which is why we made sure to announce his involvement up front, even though he won’t actually have the ability to move any funds arbitrarily.” 
 Read more: <a rel="" href="https://crypto.news/justin-sun-pledges-to-create-1b-fund-to-combat-fud-after-facing-280m-in-losses/"> Justin Sun pledges to create $1b fund to ‘combat FUD’ after facing $280m in losses </a>

Sky mulls cutting support for wBTC over Justin Sun affiliations

crypto.news

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